Category Savings

Oct 3 2015

Mutual Fund Rankings, 2015

“If a bull market must continually climb a wall of worry, then the current bull, which started more than six years ago, should be on the brink of exhaustion.”

As a preamble to Kiplinger’s 2015 Mutual Fund Rankings, this article describes the concerns that investors have about interest rates, corporate earnings, the economy, political upheaval, and other factors that could impact not only mutual fund investments, but all investments and the U.S. and the world economy.

In addition the article also provides links to Kiplinger’s Mutual Fund Finder tool and specific information about the top-performing mutual funds including large-company stock funds, midsize-company stock funds, small-company stock funds, hybrid funds, large-company foreign stock funds, small- and midsize foreign stock funds, global stock funds, diversified emerging-market funds, regional and single-country funds, sector funds, and alternative funds.

For more information, click here.  

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Remind students that there are many factors that can affect mutual fund investments.
  • Show students how to use the link to the Kiplinger Mutual Fund Finder tool that is described in the article.
  • Stress the importance of a long-term investment program–especially when planning for retirement.

Discussion Questions

  1. Assuming you believe there is a strong possibility the value of your mutual funds will decrease over the next 12 months, would you sell your funds or would you hold them? Explain your answer.
  2. Depending on your answer to the above question, what factors did you consider to help make your decision?
  3. Pick one fund you believe could help obtain your investment goals. Then use the Kiplinger Mutual Fund Finder to research the fund. Based on the information, would you still want to invest in this fund.
Sep 9 2015

Retirement Can’t Wait

A few decades ago, Americans had a pretty solid three-legged retirement stool.  Social Security and personal savings combined with traditional pensions led to good middle-class retirements for millions.  But today’s stool is a little too wobbly to support that lifestyle for coming generations of workers and retirees.  The Great Recession shows all of us just how vulnerable 401(k) type plans and IRAs can be, and with the savings rates dangerously low, the need to strengthen the system is clear.  Today, workers are largely responsible for their own retirement investments.  The days of a defined benefit pension that you couldn’t outlive are a thing of the past.  Today, we have to take greater ownership for starting our savings, managing and then figuring out how much to draw in retirement.

Most workers need advice on how to invest their 401(k) and IRA savings.  Too often, that advice is not delivered in the customer’s best interest.  The Labor Department is working with the financial services industry, consumer groups and Members of Congress to come up with a plan that protects retirement savings from financial conflicts of interest.

For more information, click here.

Teaching Suggestions

  • Ask students to analyze their current assets and liabilities for retirement planning.
  • Will your students’ spending patterns change during retirement?
  • What are the basic steps in retirement planning?

Discussion Questions

  1. Why is retirement planning so important for today’s workers?
  2. Can you depend on Social Security and your company pension to pay for your basic living expenses in retirement? Why or why not?
  3. Why is it important to start early for a secure retirement?
Aug 26 2015

Many Americans Have No Savings

About three in ten Americans have no emergency savings, according to a study conducted by Bankrate.com. This number has increased in recent years, mainly due to the lack of growth in household income. Without an emergency fund, people tend to encounter even greater financial difficulties. A person will often use high-interest debt to cover unexpected expenses. In addition to the 29 percent with no savings, another 21 percent have less than three months worth of expenses saved.

For additional information on emergency savings, click here.

Teaching Suggestions

  • Have students ask several people who their might cope with a financial emergency.
  • Have students create a plan for creating a emergency savings fund.

Discussion Questions 

  1. What are methods that might be used to cope with a financial emergency?
  2. How might a person be encouraged to create an emergency fund?
Jun 17 2015

Personal Finance Stress Test

To avoid financial disaster, several measurements are available for assessing a person’s personal financial stress:

  1.  The Debt-to-Income Ratio is obtained by dividing your debts by pretax earnings.  Generally this number should be less than 28 percent, without your mortgage, or 36 percent, including your mortgage payment.
  2.  Discretionary Expenses involve spending for items other than fixed obligations and variable nondiscretionary items, such as food and utilities. Purely discretionary expenses may involve recreation and vacations.  An analysis of these categories will allow you to delay, reduce, or eliminate various expenses to avoid financial difficulties.
  3. Emergency Savings should be able to cover three to nine months of living expenses. These funds should be readily available in savings or other easily liquidated accounts. Greater financial greater obligations will require a larger emergency fund.
  1. Additional Income involving wages or tips from a part-time job or selling personal possessions can provide a cushion in times of financial difficulty.
  1. Total Assets, both liquid and non-liquid, will reduce your vulnerability to financial turmoil.

For additional information on the personal finance stress test, click here.

Teaching Suggestions

  • Have students calculate one or more of these measurements for their life situation.
  • Have students prepare a short creative video with a summary of these measurements.

Discussion Questions 

  1. Why is liquidity important for reduced financial stress?
  2. What actions would you recommend to for a person to reduce their personal financial stress?
Jun 10 2015

Saver Survey

Each year, America Saves (www.americasaves.org) conducts a survey or its program participants to determine the attitudes and behaviors of savers.  The most recent study reports that:

  • People save mainly for their emergency fund, retirement, or repaying debt.
  • People in formal savings programs, such as America Saves, report saving larger amounts.
  • Married respondents saved much more than single respondents.
  • Females and males have different saving purposes; females favored saving for an emergency fund, males favored retirement saving.
  • Savers involved in America Saves are saving more, are more confident in their ability to manage their money, and are managing their debt better while feeling more optimistic about their financial situation.

The complete Savers Survey report is available here.

Teaching Suggestions

  • Have students talk to others about their savings habits and goals.
  • Have students prepare a graph to monitor their savings activities.

Discussion Questions 

  1. What actions can help encourage a person to have more effective savings habits?
  2. Why does being involved in an organized savings program result in more savings and better money management activities?
Jun 3 2015

Financial Flowerpots

Many devices are used for effective money management.  One is called “the financial flowerpot system,” with each imaginary pot representing an account where you “plant” the funds for achieving a financial goal.  When you direct money into this account, it’s like watering and feeding your goal.

To fill up the “financial flowerpots,” start a regular saving and investing plan with the money automatically withdrawn from your paycheck or bank account.  This automatic savings plan may be viewed as an automatic watering system for an actual flowerpot.

Three main flowerpots are recommended:

1.  The Solutions Flowerpot is the emergency fund.  These funds are available to solve problems and have a financial cushion, giving you financial peace of mind.

2. The Retirement Flowerpot is to save for your future financial independence.

3. The College Flowerpot is for those who are saving for their children’s education or for their own advanced studies in the future.

Smaller flowerpots may be used for other financial goals.  For each flowerpot, set aside a savings amount each month that will grow to your desired goal in the timeframe you set.

For additional information on financial flowerpots, click here.

Teaching Suggestions

  • Have students obtain information from others about the methods used to achieve financial goals.
  • Have students propose a method they might use to achieve a financial goal.

Discussion Questions 

1. What are the benefits of thinking of savings goals as financial flowerpots?
2. What are other potential savings goals for various household situations?

May 13 2015

Saving Your Tax Refund

The average federal income refund for this year was nearly $2,900, resulting in tens of billions of dollars ready for use. Instead of spending those funds, financial advisors recommend saving for an emergency fund, retirement, or other household goals.  Currently, these refunds represent an amount larger than the average annual personal savings rate of most Americans. Spending the refund on things you don’t need often results in reduced future financial security.

Also, consider reducing your withholding throughout the year.  The refund you receive is only getting back money you lent the government over the past year at zero per cent interest.  Instead, have an automatic withdrawal sent to your savings each month.

For additional information on saving your tax refund, click here.

Teaching Suggestions

  • Have students conduct a survey of people to determine how tax refunds are used..
  • Have students prepare an analysis of lost interest/earnings by taxpayers who received a large refund each year.

Discussion Questions 

  1. What are the benefits of receiving a large tax refund?
  2. What are the drawbacks of receiving a large tax refund?
Apr 22 2015

Protecting Your Retirement Pension

Pension advance lenders offer retirees and veterans a loan or cash advances in exchange for all or part of their pension payments.  Paying back the advance or loan, plus the high interest and fees that such loans typically include, could threaten older Americans’ retirement security.

If you are considering a pension advance, follow these do’s and don’ts:

  • If you are asked to sign up for life insurance with the pension advance, you could end up paying the insurance premium.
  • If you are resorting to pension advances due to financial difficulties, consider getting financial coaching or counseling from a professional.
  • Don’t be fooled by patriotic-sounding names, logos, or claims of government backing.
  • Don’t give anyone access or control over your monthly pension payments.

For additional information, and learn more, click here.

Teaching Suggestions

  • Ask students to research local non-profit credit counseling agencies and what services they provide.
  • Why is it important not to give anyone access or control over your monthly pension payment?

Discussion Questions

  1. Why do people resort to pension advance loans?
  2. What are other alternatives to pension advance loans?
  3. What recommendation should you take to protect your retirement pension when considering an advance?
Feb 18 2015

The Seven Baby Steps (Dave Ramsey)

“Get out of debt the same way you learned to walk–one step at a time.”

This article describes Dave Ramsey’s seven steps that anyone can take to get out of debt and begin to manage their personal finances.  These seven basic principles have been taught by Mr. Ramsey via radio, books, Financial Peace University, live events, and online.  Listed below are the seven steps discussed in this article.  Note:  You can get more information about each step by clicking on the “Learn More” tab.

  1. Begin by creating a $1,000 emergency fund.
  2. Pay off all debt using the debt snowball .
  3. Save 3 to 6 months of expenses in a savings account.
  4. Invest 15 percent of household income into Roth IRAs and pre-tax retirement accounts.
  5. Create a college funding plan for your children.
  6. Pay off your home mortgage early.
  7. Build wealth and give.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Ask students visit the Dave Ramsey website.
  • Discuss some or all of the seven baby steps described in this article. Reminder:  Students can get more information by clicking on the “Learn More” tab.

Discussion Questions

  1. How can the seven baby steps help you manage your personal finances?
  2. Do the steps in this article make you want to change your priorities and what’s important in your life? Justify your answer.
Feb 14 2015

Newly Married with $52,000 of Debt

My Wife and I Never Discussed Money Before Getting Married–and Ended Up with $52,000 of Debt

Prior to tallying up our debt, we’d talked about traveling internationally, starting a family, and, some day retiring comfortably. There was so much we wanted out of life, but . . .”

This is an excellent article that describes what can happen when a soon-to-be-married couple doesn’t talk about finances.  Fortunately, the two people in this article–Deacon and Kim Hayes–realized they had a problem and then took steps to get their finances back on track.

Specific steps this couple took can make a big difference over time.  Among the suggestions included in this article are:

  • Writing down all your assets, debts, income, and expenses.
  • Prepare a budget and review each item for opportunities to save money.
  • Replacing a newer, expensive car with an older car.
  • Selling unwanted or unneeded items online.
  • Using any extra money to repay debt.
  • Establishing an emergency fund.
  • Saving and investing a specific amount each month.

Consider This:  Deacon Hayes–the author of this article–became a financial planner and now shares his story with his clients.

For more information, Click Here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss why engaged couples need to discuss their finances before they get married.
  • Stress how easy it is to get in debt and how hard and how much time it takes to get out of debt.

Discussion Questions

  1. Assume you are dating someone who seems to spend more than they make. In this situation, would you continue to date this person?  Explain your answer.
  2. One of the suggestions included in this article is that people write down their assets, debts, income, and expenses. How can this suggestion help a young-married couple plan their financial future?
  3. Assume you have credit card debts and an automobile loan that total $75,000. What specific steps can you take to reduce or eliminate your debt?